CTO Realty Growth Announces Pricing of Public Offering of 6.375% Series A Cumulative Redeemable Preferred Stock

Rhea-AI Summary

CTO Realty Growth, Inc. (NYSE: CTO) announced a public offering of 1,500,000 additional shares of the Company’s 6.375% Series A Cumulative Redeemable Preferred Stock at $20.00 per share, raising $30,000,000. The Company granted the underwriters an option to purchase up to 225,000 additional shares. The offering is expected to close on April 11, 2024. Raymond James & Associates, Inc. is the book-running manager.

Financial Analyst

The announcement by CTO Realty Growth, Inc. regarding the pricing of their public offering of Series A Preferred Stock is a strategic move aimed at capital injection for the company's future endeavors. The pricing at $20.00 per share, below the liquidation preference of $25.00, suggests a potential discount to attract investors, which is a common practice to incentivize participation. The gross proceeds of $30 million, prior to fees and expenses, marks a significant cash inflow that can be leveraged for the stated purposes of property acquisitions, debt repayment and other investment opportunities.

Investors might find the over-allotment option of an additional 225,000 shares noteworthy, as it indicates the underwriters' anticipation of strong demand or a safety cushion to stabilize the price post-offering. The use of a shelf registration statement for the offering expedites the process, as it allows the company to sell securities to the public without the need for a separate SEC filing for each issuance.

While this capital raise could dilute current shareholders, the preferred nature of the stock means dividend priority over common shares, which may be attractive to income-focused investors. As these securities will be listed on the NYSE, their performance will be easily trackable under the ticker symbol 'CTO PrA'.

Market Research Analyst

The decision by CTO Realty Growth to expand its offering of Series A Preferred Stock will likely have implications for the company's stock market performance. The market's reception of this offering could reflect investor confidence in CTO's growth strategy and financial health. Additionally, the timing of the offering, market conditions and the performance of comparable securities will influence the success of this capital raise.

It's important to consider the competitive landscape of real estate investment trusts (REITs) and how CTO's offering positions it within the sector. The additional capital could enable CTO to seize market opportunities more aggressively, potentially increasing its market share and presence in the commercial real estate space.

Moreover, the role of Raymond James & Associates as the book-running manager, alongside other notable co-managers, lends credibility to the offering and may boost investor confidence due to their reputation and expertise in managing such financial instruments.

Legal Expert

From a legal perspective, CTO Realty Growth's adherence to SEC regulations by using an existing shelf registration is a prudent move. This approach not only streamlines the offering process but also ensures compliance with securities laws, minimizing legal risk. The clear statement that the offering will be made only by means of a prospectus supplement and the accompanying prospectus is a necessary disclaimer to avoid potential legal pitfalls related to securities offerings.

The mention of not constituting an offer to sell or a solicitation in states where it would be unlawful prior to registration or qualification underlines the company's commitment to legal compliance. This is critical to maintaining the integrity of the offering and protecting the interests of both the company and potential investors.

WINTER PARK, Fla., April 04, 2024 (GLOBE NEWSWIRE) -- CTO Realty Growth, Inc. (NYSE: CTO) (“CTO” or the “Company”) today announced the pricing of a public offering of 1,500,000 additional shares of the Company’s 6.375% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), liquidation preference $25.00 per share, at a public offering price of $20.00 per share. CTO will receive gross proceeds of $30,000,000 from the sale of the Series A Preferred Stock before deducting the underwriting discount and other estimated offering expenses. The Company also granted the underwriters a 30-day option to purchase up to an additional 225,000 shares of the Series A Preferred Stock to cover over-allotments, if any. The additional shares of Series A Preferred Stock constitute an additional issuance of shares of Series A Preferred Stock, with 2,978,808 shares of Series A Preferred Stock currently issued and outstanding (the “Outstanding Series A Preferred Stock”) (which reflects the previous repurchase by the Company of 21,192 shares of Series A Preferred Stock). The Series A Preferred Stock will be treated as a single series with and have the same terms as the Outstanding Series A Preferred Stock. The Outstanding Series A Preferred Stock is, and the Series A Preferred Stock sold in the offering will be, listed on the New York Stock Exchange under the ticker symbol “CTO PrA.” The offering is expected to close on April 11, 2024, subject to customary closing conditions.

CTO intends to use the net proceeds from the offering for general corporate and working capital purposes, which may include property acquisitions, commercial loan and investment opportunities and repayment of debt, including amounts outstanding under its credit agreement.

Raymond James & Associates, Inc. is acting as book-running manager for the offering. BMO Capital Markets Corp., KeyBanc Capital Markets Inc., Baird, PNC Capital Markets LLC, B. Riley Securities, Inc., Janney Montgomery Scott LLC, JonesTrading Institutional Services LLC, Regions Securities LLC and Synovus Securities Inc. are acting as co-managers for the offering.

The Series A Preferred Stock will be offered under the Company’s existing shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (“SEC”). The offering will be made only by means of a prospectus supplement and the accompanying prospectus, copies of which may be obtained from Raymond James & Associates, Inc., Attention: Equity Syndicate, 880 Carillon Parkway, St. Petersburg, Florida 33716, by telephone at (800) 248-8863, or by email at prospectus@raymondjames.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About CTO Realty Growth, Inc.

CTO Realty Growth, Inc. is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States. CTO also externally manages and owns a meaningful interest in Alpine Income Property Trust, Inc. (NYSE: PINE), a publicly traded net lease REIT.

Safe Harbor

Certain statements contained in this press release (other than statements of historical fact) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can typically be identified by words such as “believe,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “could,” “may,” “should,” “plan,” “potential,” “predict,” “forecast,” “project,” and similar expressions, as well as variations or negatives of these words. Examples of forward-looking statements in this press release include, without limitation, statements regarding the proposed offering of the Series A Preferred Stock, the expected use of the net proceeds from the offering, the listing of the shares of Series A Preferred Stock sold in this offering on the New York Stock Exchange and the Company’s expectations concerning market conditions for an offering of the Series A Preferred Stock.

Although forward-looking statements are made based upon management’s present expectations and reasonable beliefs concerning future developments and their potential effect upon the Company, a number of factors could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. No assurance can be given that the offering discussed above will be consummated, or that the net proceeds of the offering will be used as indicated. Consummation of the offering and the application of the net proceeds of the offering are subject to numerous possible events, factors and conditions, many of which are beyond the control of the Company and not all of which are known to it, including, without limitation, market conditions and those described under the heading “Risk Factors” in the prospectus supplement relating to the offering and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which can be accessed at the SEC’s website at www.sec.gov.

There can be no assurance that future developments will be in accordance with management’s expectations or that the effect of future developments on the Company will be those anticipated by management. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

Contact:

Lisa M. Vorakoun Vice President, Chief Accounting Officer and Interim Chief Financial Officer and Treasurer (386) 274-2202 lvorakoun@ctoreit.com

FAQ

How many additional shares of Series A Preferred Stock were offered in the public offering?

1,500,000 additional shares of the Company’s 6.375% Series A Cumulative Redeemable Preferred Stock were offered.

What is the public offering price per share for the Series A Preferred Stock?

The public offering price per share for the Series A Preferred Stock is $20.00.

What are the gross proceeds CTO will receive from the sale of the Series A Preferred Stock?

CTO will receive gross proceeds of $30,000,000 from the sale of the Series A Preferred Stock.

Who is acting as the book-running manager for the offering?

Raymond James & Associates, Inc. is acting as the book-running manager for the offering.

When is the offering expected to close?

The offering is expected to close on April 11, 2024, subject to customary closing conditions.